What To Hold: 3 Hold-Rated Dividend Stocks SEMG, CY, AEG
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."
Dividend Yield: 4.20%
(NYSE:
) shares currently have a dividend yield of 4.20%.
SemGroup Corporation, together with its subsidiaries, provides gathering, transportation, storage, distribution, marketing, and other midstream services. It operates through six segments: Crude, SemStream, SemLogistics, SemCAMS, SemMexico, and SemGas. The company has a P/E ratio of 29.91.
The average volume for Semgroup has been 518,900 shares per day over the past 30 days. Semgroup has a market cap of $1.8 billion and is part of the energy industry. Shares are down 42.3% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Semgroup
as a
. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 232.3% when compared to the same quarter one year prior, rising from -$17.61 million to $23.30 million.
- SEMGROUP CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEMGROUP CORP reported lower earnings of $0.64 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $0.64).
- The gross profit margin for SEMGROUP CORP is rather low; currently it is at 19.16%. Regardless of SEMG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SEMG's net profit margin of 6.17% compares favorably to the industry average.
- SEMG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.61%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Semgroup Ratings Report.
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Dividend Yield: 4.20%
(NASDAQ:
) shares currently have a dividend yield of 4.20%.
Cypress Semiconductor Corporation provides mixed-signal programmable solutions, semiconductor memories, and integrated semiconductor solutions worldwide.
The average volume for Cypress Semiconductor has been 8,011,100 shares per day over the past 30 days. Cypress Semiconductor has a market cap of $3.5 billion and is part of the electronics industry. Shares are down 26.5% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Cypress Semiconductor
as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- CY's very impressive revenue growth greatly exceeded the industry average of 11.0%. Since the same quarter one year prior, revenues leaped by 147.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CYPRESS SEMICONDUCTOR CORP has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CYPRESS SEMICONDUCTOR CORP turned its bottom line around by earning $0.11 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.11).
- After a year of stock price fluctuations, the net result is that CY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CYPRESS SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CYPRESS SEMICONDUCTOR CORP is currently lower than what is desirable, coming in at 27.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 6.53% significantly trails the industry average.
- You can view the full Cypress Semiconductor Ratings Report.
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Dividend Yield: 4.30%
(NYSE:
) shares currently have a dividend yield of 4.30%.
Aegon N.V. provides life insurance, pensions, and asset management services. The company operates through the Americas, the Netherlands, the United Kingdom, and New Markets.
The average volume for Aegon has been 1,461,400 shares per day over the past 30 days. Aegon has a market cap of $16.5 billion and is part of the insurance industry. Shares are down 15.7% year-to-date as of the close of trading on Friday.
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TheStreet Ratings rates
Aegon
as a
. The company's strengths can be seen in multiple areas, such as its increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 131.1% when compared to the same quarter one year prior, rising from $174.56 million to $403.44 million.
- AEG, with its very weak revenue results, has greatly underperformed against the industry average of 17.7%. Since the same quarter one year prior, revenues plummeted by 84.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has significantly decreased to -$2,100.78 million or 338.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Insurance industry and the overall market, AEGON NV's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Aegon Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.